RECENT DEVELOPMENTS IN GOODS AND SERVICES TAX

Amid West Asia-US crises, global volatility continues. Indian businesses need to think boldly, innovate fearlessly and invest strategically in emerging opportunities. There is a need for India Inc to move beyond incremental progress to transformative actions, creating global leaders, resilient supply chains, new technologies and solving national challenges. This advise comes from PS-2 to Indian PM. According to CEA, present US-Iran war is a balance of payments stress test. Uday Kotak of Kotak Mahindra Bank has viewed that our economy is not far from oil shock unless the war stops. Rating agencies suggest that India's GDP growth may moderate in 2026-27 in the range of 6-7% from expected growth of 7.6% in FY 2026.

GSTN has issued few advisories on ITC refund through offline utility made mandatory and enhancements in e-way bill portal. Rules relating to HSNS Cess have also been amended.

GSTAT has reiterated and extended the appeal related scrutiny norms for appeals till 31st December, 2026. Further, GSTAT has issued an important order on classification and allocation of appeals before GSTAT benches which includes constitution of benches and categorization of cases, hearing and option for virtual hearing, bench roster, single bench matters etc.

While there is no update on schedule of next meeting of GST Council, it is hoped that the same may happen in this summer only.

Media reports suggest that MoF is in talks with State Governments to ease out GST registration for dark stores and warehouses operated by e-coms and quick-coms in view of rapid expansion in smaller towns. Since this subject would involve centre -states, GST Council will have to take a view on the same. Also, MoF is thinking to restrict manual editing of GSTR-3B returns, once data is auto filled from GSTR-1 and GSTR 3B returns so as to improve monitory of defaulting suppliers and lower down mismatches in the returns.

Relaxed scrutiny norms for appeal filings on the portal till 31.12.2026

• The GSTAT has extended the earlier lenient scrutiny mechanism for appeals filed on the GSTAT portal up to 31 December 2026 under Rule 123 of Goods & Services Tax Appellate Tribunal (Procedure) Rules, 2025 in continuation of the benefits already granted under:
  • Office Order dated 20.01.2026
  • Instructions dated 10.03.2026
• The instructions recognize practical and technical difficulties faced by taxpayers and professionals during the initial phase of the GSTAT e-filing system. This has been done to ensure smooth transition to digital appellate filing.
• Registry officers should raise only substantive defects and avoid objections for minor procedural/formal defects.
• No defect should be raised if:

Soft copies of important documents are uploaded, such as:

• Show Cause Notice (SCN)
• Order-in-Original (OIO)
• Order-in-Appeal (OIA)
• Statement of Facts
• Grounds of Appeal
• Proof of pre-deposit / court fee
• Digitally generated GSTN documents need not be certified.
• Scanned certified copies are acceptable if the endorsement clearly shows certification by the issuing authority.

(Source: Instructions F.No. GSTAT/Pr.Bench/

Portal/125/25-26 dated 14.05.2026)

Classification and allocation of appeals before GST Appellate Tribunal Benches

Goods and Services Tax Appellate Tribunal lays down the framework for how GST appeals will be assigned and heard by GSTAT benches across India. The order was issued by the Principal Bench, New Delhi under Section 109(8) of the CGST Act, Rule 110A of the CGST Rules, and Rule 123 of the GSTAT Procedure Rules, 2025. Following points are to be noted:

• All cases are to be listed first before a Division Bench : Even though smaller matters (below Rs. 50 lakh and involving no question of law) may legally be heard by a Single Bench, the order directs that:
  • Every pending and future appeal must first come before a Division Bench;
  • The Division Bench will decide whether the matter involves any question of law;
  • Only then can it be transferred to a Single Bench through the President/Vice-President.

• Three-category classification of GST appeals:

(Source: OFFICE ORDER No. 3/GSTAT/ PB/2026 dated 14.05.2026)

HSNS Cess Rules amended to simplify approval and accounting procedures

• CBIC has amended the Health Security se National Security Cess Rules, 2026 with immediate effect which provides as follows:

• Rule 35(3) omitted completely.
• In Rule 35(5), the requirement relating to consultation with the Budget Division, Department of Economic Affairs has been removed.
• In Rule 35(6), authority reference has been simplified by replacing approval requirements involving the Principal Chief Controller of Accounts, CBIC and C&AG with Chief Controller of Accounts (Finance).

• These rules shall be applicable w.e.f. 20.05.2026.

(Source: Notification No. 03/2026-HSNS CESS dated 20.05.2026)

Filing of Annexure-B for ITC refund thru offline utility made mandatory

GSTN has issued an advisory informing mandatorily requirement of filing of Annexure-B at GSTN portal for refund applications under specific categories involving accumulated ITC to be effective from 18th May 2026, and has further prescribed instructions for filing such refund applications and key instructions are summarised below :

• Taxpayers are now mandatorily required to furnish the revised Annexure-B through the prescribed offline utility for refund categories related to Export of goods/services without payment of tax, supplies made to SEZ without payment of tax, ITC accumulated due to inverted duty structure and export of electricity without payment of tax
• Annexure-B is to be uploaded in JSON format generated from the utility, instead of the earlier manual statements/PDFs
• The revised utility captures detailed inward supply with invoice level information relating to ITC claimed in refund applications.
• The utility enables duplicate document validation for each type of inward supply based on supplier GSTN, invoice number, invoice date, category of input supply and HSN/SAC code. Uploaded invoices are also validated with GSTR-2B.
• Taxpayers are required to correctly report ITC reversals u/s 17(5) and CGST prescribed Rules 38, 42 and 43 of CGST Rules, 2017.
• A specific note has been added in the Read me section of the utility for taxpayers guidance.

(Source: GSTN Advisory dated 18.05.2026)

Enhancements in the E-Way Bill Portal

The GST E-Way Bill system has introduced several enhancements to improve compliance, reduce duplication, and simplify transportation-related processes. Key changes are:

Auto Calculation of Distance Based on PIN Codes

• Distance between supplier and recipient locations is now auto-populated using PIN codes.
• Taxpayers can enter up to 10% additional distance beyond the system-calculated value.
• Helps reduce manual errors and misuse.

'One Invoice - One E-Way Bill' Rule

• Multiple E-Way Bills cannot be generated for the same invoice/document number.
• Once an E-Way Bill is generated, the system blocks duplicate generation by consignor, consignee, or transporter.

Extension of Validity During Transit/Movement

• Validity of E-Way Bill can now be extended when goods are:
  • in movement, or
  • in transit (warehouse/transport hub/etc.).
• User must update transport details and transit status on the portal before expiry.

Expiry Tracking Facility

• Portal provides reports of E-Way Bills nearing expiry.
• Helps transporters and businesses avoid invalid movement of goods.

Vehicle Number Validation

• Integration with the VAHAN database validates vehicle registration numbers entered in E-Way Bills.
• Incorrect or non-existing vehicle numbers trigger alerts.

Multi-Vehicle Movement Facility

• One E-Way Bill consignment can be moved in multiple vehicles after transshipment.
• Useful for hilly areas, logistics hubs, or route changes.

Composition Dealer Restrictions

• Composition taxpayers are restricted from generating interstate E-Way Bills where not permitted under GST law.
• Certain document/tax fields are also restricted.

E-Way Bill 2.0 / Dual Portal System

• New interoperable portal allows generation, extension, update, and printing from either portal.
• Real-time synchronization improves system availability and reduces downtime risk.

(Source: GSTN Advisory dated 21.05.2026)